The construction of the world’s first zero subsidy offshore wind farms in coming years is expected to render coal-based power plants unviable in the Netherlands, leading to their closure much before an official ban on them begins in the country in 2030, GlobalData said.
The closure of these plants should lead to an increase in Dutch wholesale power prices, making the operation of the wind power projects at sea profitable even without the aid of subsidies, according to the analytics firm.
“Under the zero subsidy mechanism, the power generated from the offshore wind farm will be sold in the wholesale market instead of a continuous revenue scheme which locks in a fixed income,” said Mohit Prasad, project manager at GlobalData.
Swedish utility Vattenfall earlier this month had won the zero-subsidy tender for the 760MW Hollandse Kust 3&4 zone off the Netherlands, after already being successful in a similar tender last year for the adjacent Hollandse Kust 1&2 zone.
Vattenfall’s wind power chief, Gunnar Groebler, before the latest tender had stressed that his company will profit from significant scale advantages by combining all the Hollandse Kust project into one large development of roughly 1.5GW.
But the Dutch project’s construction deadline is too early to also take advantage of an expected new generation of offshore wind turbines.
They are slated to come online by 2023, two years earlier than zero-subsidy projects in Germany, where developers hope to be able to use a new generation of super-sized offshore turbines in the 13-15MW range in order to push costs down.
For Hollandse Kust 1-4, Vattenfall has lined up Siemens Gamesa’s SG 10.0-193 DD turbine, which is one of the largest offshore wind machines currently on offer, but with 10MW not as giant as the 13-15MW turbines expected to hit the market in coming years.
“The developers in Germany banked on the possibility that turbine capacities would have increased sufficiently to help them reduce generation costs,” GlobalData’s Prasad added.
“They are still hopeful for the project due to the proposed introduction of a carbon fee system by the Government on emissions in 2020, at €18/metric ton of CO2 which will rise to €35/metric ton in 2030.”
Preparations for the construction of Hollandse Kust are already in full swing.
Italian cabling company Prysmian Group has received an order by Vattenfall to provide the 66kV submarine inter-array cable systems for Hollandse Kust 3&4.
Delivery is due by 2022, pending on Vattenfall’s notice to proceed with the project, which is expected by early 2020 at the latest, Prysmian said.